Saudi Energy Minister Khalid al-Falih told Russia's TASS news agency that his country had no intention of unleashing a 1973-style oil embargo on Western consumers, but rather was focused on raising output to compensate for supply losses elsewhere, such as Iran.
Falih said Saudi Arabia would soon raise output to 11 million barrels per day (bpd) from the current 10.7 million. He added that Riyadh had capacity to increase production to 12 million bpd.
"Oil prices are finely balanced in today's trading session despite the Saudi pledge to boost production. It is still not a foregone conclusion that the kingdom's production increase will be enough to compensate for the potential output loss from Iran and Venezuela," said Abhishek Kumar, senior energy analyst at Interfax Energy in London.
Brent crude futures for December delivery rose 5 cents to settle at $79.83 a barrel. West Texas Intermediate (WTI) for November delivery also rose 5 cents to settle at $69.17 on its last day as the U.S. front-month. In intraday trade, WTI fell as low as $68.27, its lowest since Sept. 14.
Several U.S. lawmakers, meanwhile, have suggested imposing sanctions on Saudi Arabia over the killing of journalist Jamal Khashoggi. The kingdom, the world's largest oil exporter, pledged to retaliate against any sanctions with "bigger measures."
"The White House's dithering highlights the unwillingness of the Trump Administration to take any meaningful action against Riyadh, just a few weeks prior to the U.S. Iran sanctions coming into play," said Fiona Cincotta, senior market analyst at City Index by online trading services firm Gain Capital, in a note.
"A veiled threat of using oil as a weapon is essentially tying U.S. hands. Investors are watching and waiting for the next chapter before positioning themselves accordingly," Cincotta said.
U.S. sanctions on Iran's oil sector start on Nov. 4 and analysts believe up to 1.5 million bpd in supply could be at risk.
The Organization of the Petroleum Exporting Countries (OPEC) agreed in June to boost supply to make up for the expected disruption to Iranian exports.
An internal document reviewed by Reuters suggested OPEC is struggling to add barrels as an increase in Saudi supply was offset by declines elsewhere, including Iran and Venezuela.
The outlook for demand next year, meanwhile, is deteriorating.
OPEC estimates demand for its crude will fall to an average of 31.8 million bpd next year, from an average 32.8 million bpd this year. - Reuters